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Persian lime, Mexico's second most important export product
After the avocado, Persian lime is one of Mexico's most dynamic products. It's prices can be very low, but it has also been one of the most expensive products at the national level. Persian lime is Mexico's second most important export product.
According to a source dedicated to the exports of this citrus fruit in the area of Martinez de la Torre and who preferred to remain anonymous, said that the companies that were started 30 or 40 years ago and that are currently faring well, despite the current crisis, can sustain themselves because they have a solid financial base.
He also said that there currently were 50 to 70 small and medium-sized businesses in Martinez de la Torre that had a small operation but also participated in the American and European markets.
He also said that the cold weather and the fires in the United States had not lead to an increase in Persian lime exports to the US or to an improvement in prices. He said that prices usually rebounded in the US market in the winter months, which go from December to February, and can include March and last as long as a few days before Easter, but that they were low for the rest of the year.
The product is exported to the US and not to Europe because of the crisis
The exporter said that the crisis in Mexico had lead to an increase in gasoline and basic input prices, which has caused producers to invest less and less in the fields. As a result, most of the country's production had a low quality.
Exports to the United States have increased because it is the only market that will accept this low quality product. Producers can't invest in fertilizers, fungicides, and herbicides, so they can only produce a quality accepted by the US.
He said producers weren't paid poorly in the United States, but that production prices were more expensive so producers didn't have money to invest in their orchards.
The problem of achieving a lower quality is that the production must be sent to the United States or the national market. The producer who can invest can produce a quality product that can be sent to the European and Asian markets, where the minimum price of the product is up to 3 pesos per kilo. Meanwhile, the lower quality product in the American market is paid at only one peso per kilo and the producer's expenses are higher than the price paid by the American market.
"The European market pays up to 10 pesos per kilo, which is the maximum price in the regular season. Obviously, the quality of the product has to be higher: the limes must be bigger, have more color, have a 30 to 40 days long shelf life. It's the opposite of the lime that is sent to the United States, which is more juicy, ripe, light, smooth, and has a shorter shelf life (15 days), as ripe lime should be consumed immediately. Meanwhile, the lime sent to Europe can be refrigerated for up to 60 days."
Solid companies prefer the European and Asian markets
According to our unnamed source, the strength of the companies lies in the European market, not in the US market, because that market has higher expectations than the North American one.
"Europe considers that Persian limes are an exotic product, while the US sees it as a conventional product, which is something that really sets the tone. The European market considers it an exotic product, which makes it more profitable," he said.
He also stated he preferred to remain anonymous due to security issues, but that his company had focused on the European and Asian markets for some year, dismissing the US market a little, even though it has a weekly consumption of 400 to 600 containers per week, because of the low prices they paid.
He said the US market was definitely attractive, but that Mexico's high production destabilized prices. In addition, he said, lime prices in the United States and Europe changed every day and were ruled by supply and demand.
"The lowest price in the United States has been $5 dollars, which is no good for producers or exporters. However, when the US has no limes, producers can be paid 50 to 100 dollars per box," he said.
He said that prices only increased so high in the US market in winter season, when they basically don't have limes, and that at that moment the US market became more attractive than the European market, but that prices for the rest of the year in the US were low.
He said that, in the rest of the year, Europe, Asia, and other international markets were more convenient for the sale of lime as the product was better appreciated and achieved better prices than in the United States.
He also acknowledged that US proximity to Mexico allowed small, medium-sized, and starting companies to immediately export their product at a low investment price.
In contrast, only a few exporters can access the European market due to the costs of transporting the fruit by boat and making an investment that isn't paid immediately.
He said that the US paid producers in 30 to 45 days, but that exporters who shipped their fruit to Europe were paid after 60 days, making it harder for exporters to ship their products there.
Mexico's growth is higher than that of Brazil
There are more and more companies that want to only export to the European market. Brazil is Mexico's main competitor in Europe, with 60 percent share of lime exports to that destination, while Mexico accounts for 40 percent.
However, Brazilian exports to Europe increase at a sustained one percent a year while Mexican exports to the same destination increased by 11 percent in 2016.
As a result, he said, Mexico has a bigger opportunity than Brazil in Europe, which is much more attractive than the American market.
The US market is dominated by large companies and its difficult for small companies to compete with them, so exporters should turn to the European and Asian markets.
The American market, he said, has about 350 million inhabitants but Europe is equally big and it's a market that recognizes the Mexican quality more than the United States.
In Europe and in the Asian market, the lime is used for gourmet or exotic products. Currently, South Korea and Hong Kong lead the Asian Market's demand and it is important is to look for alternative markets, he added.
Publication date: 1/10/2018
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